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Chamber supports state film tax credit

Local officials hope the state continues to provide tax reductions to film companies in Georgia, because Newton County receives sales tax from a regular stream of filming projects and the thousands of tourists who come solely because of The Dukes of Hazzard, In the Heat of the Night and the Vampire Diaries.

Covington was the only community invited to send representatives to Tuesday’s film tax credit hearing hosted by the House Committee on Economic Development and Tourism. The state is considering ending the tax credit based on a recommendation by the Special Council on Tax Reform and Fairness, which said the film tax credit deprives the state of $89 million in taxes every year. The council wants to simplify the tax code and recommended removing most tax credits in Georgia.

Film industry and economic development officials want the tax credit to remain and point to the 348 productions filmed in 50 Georgia counties in fiscal year 2010, which created an economic impact of $1.33 billion. That is a 400 percent increase since the credit was introduced in 2008. The credit allows companies to receive tax credits worth 30 percent of their production costs on productions of greater than $500 million.

Chamber President Hunter Hall and Tourism Director Clara Deemer told assembled officials how the state’s increased filming industry has benefited their small community.

"We told them about the owner of Covington Rentals and how he has earned the work of the Vampire Diaries, providing tables, chairs and other material around Atlanta," Hall said Friday. "We told them about the owner of the Hampton Inn and how many rooms production companies have booked. We showed them the picture of a family in New Hampshire that’s visited three times because of their love of the Vampire Diaries."

Deemer has continually said that 75 percent of Newton County’s tourism is movie related. According to a 2009 study, the latest numbers available, visitors spent an estimated $72.75 million with local merchants.

The county has been blessed to have popular TV shows film locally, the Vampire Dairies being the latest, which draw domestic and international fans.

The tax reform council recommended the removal of the tax credit because there it said there is no proof that it, or any other tax credit, leads to significant job and revenue creation. An ongoing study by the state’s economic development should be finished in 2011 and could provide a more clear answer.

Under the tax credit, companies can receive tax credits worth 30 percent of their production costs, based on equipment purchases, personnel costs and other services. Because Georgia’s income tax rate is only 6 percent for the vast majority of workers, those companies end up with a tax credit much larger than their tax liability.

Georgia’s film tax credit is transferable one time, which means those companies can sell their tax credits to other companies or individuals, at a reduced price. So a person would buy $1 worth of tax credit for somewhere around 90 cents. The film companies essentially receives free revenue, while the state loses tax revenue from those third parties. In this way, the tax credit can deprive the state of revenue. The question is whether the additional film investment offsets the reduced tax revenue.

Because 44 other states and the District of Columbia also have film tax credit programs, a reduction in Georgia’s incentive program could lead to the loss of much of its film business.